Sponsors and Designated Advisers

Sponsors are JSE registered persons, being companies, sole proprietors or partnerships, which advise ListCos regarding the application of and compliance with the JSE LR. Sponsors are usually required to have at least three individual Approved Executives in their employment who are registered with the JSE and have expert knowledge of the JSE LR. Sponsors are required to be appointed by Main Board ListCos. Designated Advisers ("DAs") are required to be appointed by ALT^x ListCos (collectively referred to as "sponsors").

All ListCos are required to have a continually appointed sponsor. Sponsors are usually independent of ListCo but in some instances may not be independent, which then limits the advisory services able to be provided to such ListCo in respect of the less important Corporate Actions ("Lesser CAs"), being amendments/approvals of MOIs, Schedule 9 dilutive share incentive schemes, non‑dilutive share incentive schemes, general issues of shares for cash (approval and issue(s)), general repurchases (approval and repurchase(s)), increase in share capital (and conversion of par to no par value shares) and change of name. The appointment of an independent sponsor is required for the more important CAs, being transactions and CAs requiring shareholder approval (excluding the Lesser CAs), unbundlings not requiring shareholder approval, related party ("RP") transactions, removal of listings and rulings in relation to these CAs. There are complex rules contained in Section 4 that are applied in determining whether a sponsor is independent.

Sponsors have quite onerous responsibilities and are required to have an answer to every/any question asked of them by a ListCo. They are required to approve and release all ListCo announcements on SENS and effect the listing of all ListCo shares onto the JSE List. They must check and submit all ListCo documentation requiring approval to the JSE.

If sponsors are ever in breach of their responsibilities, they may be censured and fined up to R1 million by the JSE. The JSE may deregister a sponsor in extreme circumstances. The JSE has broad powers of investigation and publication of information regarding sponsors.

Sponsors are entitled to object to a JSE decision of censure/penalty/publication of action taken and reasons therefor. Sponsors may take a JSE decision to remove a sponsor from the register on appeal.

Sponsors have a specific right of appeal regarding a deregistration process initiated by the JSE. Sponsors may act as company secretary to any ListCo. Such appointment would require segregation of duties within a sponsor organisation to ensure no conflicts of interest between sponsor responsibilities/advice and company secretary responsibilities/advice.

Tabular summary

Listings Requirement			Summary of provision
Section 4			Sponsors and DA JSE LR combined
4.1 – 4.2			Application to be registered by the JSE
4.3 – 4.9			Appointment and independence – Main Board
			ListCos require a continually appointed sponsor but may use other sponsors for CAs. Independent sponsor appointment is required for important CAs. Non-independent sponsor appointment allowed for less important CAs. Independence measures detailed.
4.10			Events requiring only sponsor approval are announcements, cap issues, scrip dividends, cash dividends, change of name, conversion of par value (“PV”) to no-par value (“NPV”), subdivisions, consolidations, general authority for payments, Repurchase of ListCo Shares (“ROS”) and Issue of Shares for Cash ("IFC").
4.11 – 4.12			Sponsors may resign or ListCos may terminate sponsors
			Reasons must be given to the JSE within 48 hours and to the new incoming sponsor within five business days (“bd”). New sponsors must be appointed within 30 bd after consideration of reasons.
4.13 – 4.16			Responsibilities
			Sponsors must have expert knowledge of the JSE LR and must continually advise ListCos on the application and compliance with the JSE LR, be continually “qualified”, advise ListCo directors of amendments to the JSE LR, and discharge responsibilities with due care and skill, check credentials of other advisers to ListCo, notify the JSE of any ListCo breaches of the JSE LR, approve all JSE LR required documentation and announcements and where required, submit the same to the JSE, submit and communicate all correspondence to/from the JSE to/from ListCo, submit director declarations to the JSE and advise directors of their responsibilities in terms of the JSE LR, ensure suitable communication procedures exist within ListCo and attend meetings with the JSE and ListCo or be advised of same.
4.17 – 4.18			ListCo shares issued to sponsors on listing are subject to partial lock-up.
4.19 – 4.22			Penalties
			If a sponsor is in breach of the JSE LR the JSE is empowered to effect a public or private censure and a penalty of up to R1 million. Sponsors and designated advisers have a right of objection in terms of Section 1.4 and have a right of appeal if the JSE proposes/ proceeds with a deregistration process.
Schedule 4			Complex rules dealing with sponsor independence. Disclosures that are made when documents are submitted to the JSE for approval.